Dealing with the Effects of a Retrenchment

Last year, South Africa experienced what was described as the country's largest ever retrenchment crisis with thousands of people having lost their jobs as a result of either formal or informal layoffs.

In October last year, Solidarity released a report on retrenchments which estimated job losses of around 44,000 permanent and 73,000 contractual staff within the formal sector's larger companies as a result of formal retrenchments, with the hardest-hit sectors being the mining and manufacturing industries. This figure does not include job losses that took place without formal retrenchments (as in small businesses and the informal sector) and was not a representation of the total job losses in the country, which was predicted to have passed the one million mark at the end of 2009.

Although the recession is said to be something of the past, there are unfortunately those individuals who still face the aftermath of having lost their jobs as well as incalculable social impact that retrenchments have on society.

Some companies have been retrenching staff while still showing profits, and while the company might be reducing a percentage of their costs by letting staff go, they need to remember that in doing so they are cutting an employee's income by one hundred percent. It is estimated that every employee supports between 7 and 11 dependants and the effect on letting someone go is both devastating to the individual as the society in general. Companies should therefore regard retrenchments only as a crisis measure.

Retrenchment can have a traumatic and emotional impact on the still-employed as well as those who have been laid off. The remaining employees may feel demotivated and insecure which can result in lower productivity within the organisation - especially if the retrenchment process hasn't been handled appropriately. ‘For a retrenched individual, the impact of being retrenched can be devastating. Retrenchments don't only affect the financial security of an individual, but also their personal sense of worth because some employees derive a lot of self-worth from their vocations. Retrenchment brings uncertainty because you don't know for how long you will be unemployed. If not managed correctly, retrenchment could result in depression,' says Gillian Meier, CEO of Jobs.co.za.

Know Your Rights
Under South African law, a valid economic, technical or structural reason to initiate a lawful retrenchment as a result of the business's operational requirements must exist. The procedure that needs to be followed for a dismissal based on operational requirements (retrenchment) is regulated in terms of section 189 of the Labour Relations Act. Companies have to inform employees that they are considering retrenchments and then give those employees a chance to motivate reasons why they believe they should not be retrenched. Possible alternatives to dismissal should also be investigated and considered before finally initiating a retrenchment. If a retrenchment is unavoidable, then the company is compelled to pay the employee a severance package of a minimum one week's salary for every year employed by the company. In some cases, companies have been generous in providing more favourable severance packages. The first R30,000 of a severance packages is considered tax free by SARS.

Follow these guidelines to get back on track following a retrenchment:

1. Be honest to those around you about your retrenchment - don't try to hide it.
2. Don't waste your time questioning why you were retrenched rather than someone else. More importantly, don't blame yourself.
3. Start networking immediately (both online via social networks and in the real world). Don't withdraw yourself from society or potential opportunities.
4. Use the opportunity to further your skills. If your finances permit, then register for a course or trade. Alternatively, volunteer your services in areas where you might be able to learn new skill.
5. Seek financial advice and plan the use of your severance package. Budget carefully. This isn't the time for elaborate vacations or retail therapy.
6. Get your CV up to date as soon as possible, register on job-seeking websites such as Jobs.co.za and make your CV active and searchable so that companies can find you.
7. Start applying for as many jobs as possible for which you have the required skills. Write your covering letters with careful consideration and thought, rather than simply using a template.
8. Remember to highlight where you can add value to the position you're applying for. Show you're dedicated, skills and committed.

Having the word ‘retrenched' on your CV as a reason for leaving your previous company, is nothing to be embarrassed about. It doesn't reflect your abilities as an employee but rather the difficult financial times. The worst thing you can do is hide it. Be honest on your CV. To combat any fears a potential employer or recruiter may have about your ability as an employee, get as many references as possible to provide testimony to you skills. If you can, get a quality reference from the retrenching company which clearly describes their reasons for retrenchment. And, where possible, get them to highlight the value you added to the organisation and include this information with your CV or during the interview stage.

Sources:
Jobs.co.za (http://www.jobs.co.za)
Solidarity (http://www.newgate.co.za/afleggings/retrenchments.htm)
Labour Protect: http://www.labourprotect.co.za/retrenchments.htm

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